2006-06-21 07:30:46 · 12 answers · asked by aquaspongebob 1 in Business & Finance ➔ Personal Finance
It is possible, but unlikely. You will be taxed at the rate that is current for your tax bracket. If you have a considerable amount of income when you withdraw all or part of your money, your combined federal and state income tax rates could reach 50% or more. At today's tax rates, that's a near impossibility, but if tax rates rise by the time you retire, it could happen.
One of the reasons you defer taxes until retirement is because it is presumed that you will no longer be an active earner in the work force, which would place you in a lower tax bracket. Again, this helps to make a 50% tax bracket an unlikely occurrence for you when you retire.
2006-06-21 07:35:25 · answer #1 · answered by VinTek 7 · 2⤊ 0⤋
No, your 401K withdrawals are treated the same as any kind of withdrawal that is considered income, based on your tax basis. So , if you are in a 15% tax bracket, then anything you withdraw from your 401K would be in that tax bracket (this is very simplified and based on you reaching retirement age)
However, with the cost of government going up, I can see where 50% may come into play some day LOL
2006-06-21 14:35:45 · answer #2 · answered by Raidered81 3 · 0⤊ 0⤋
Your 401k remains intact. As you withdraw funds you pay the tax as if you earned the money you withdraw at the tax rate for your income level. At this time the top rate for those earning over $330k is 35%. Your state may also have an income tax. If you would be paying 50% you wouldn't have to worry about it.
2006-06-21 14:38:42 · answer #3 · answered by HH@20 2 · 0⤊ 0⤋
Short answer: no.
Long answer - they take some, but it depends on your tax bracket, and how quickly you withdraw funds. Unless the tax rates zoom upwards, 50% is not happening, but 20 - 30% might.
2006-06-21 14:34:06 · answer #4 · answered by Thomas F 3 · 0⤊ 0⤋
kinda but not really, the money you contribute to your plan isn't taxed because you deduct the amount when you file income tax each year, so when you retire, you will have to pay tax.
it won't be 50% but you will have to pay tax when you withdraw as it's part of your income
2006-06-21 14:38:06 · answer #5 · answered by jean 4 · 0⤊ 0⤋
No, there is a penalty for early withdrawal of about 10% I think.
2006-06-21 14:33:51 · answer #6 · answered by ? 6 · 0⤊ 0⤋
yep
2006-06-28 14:00:32 · answer #7 · answered by mrs.smith 2 · 0⤊ 0⤋
I agree, nope!
2006-06-21 14:32:56 · answer #8 · answered by -:¦:-SKY-:¦:- 7 · 0⤊ 0⤋
No
2006-06-21 14:31:56 · answer #9 · answered by Oh Boy! 5 · 0⤊ 0⤋
Hell no.
2006-06-21 14:34:24 · answer #10 · answered by naughty_sharky 3 · 0⤊ 0⤋